Clawbacks & start date negotiation at VP/Principal
Hi all — looking for advice on bonus clawback risk when switching funds. Tried to be brief...mainly focused on cash bonus clawback but (less so) also applies to carry.
I’m a VP at a buyout fund with a 12-month gross clawback on my year-end bonus expiring early summer. If I leave before then, expect they’ll enforce it and I’d have to repay gross, which would wipe out ~50% of my liquid savings.
I’m currently in a few processes. Most processes likely to wrap late Jan / end-Feb, but start dates are flexible/unclear. Summer start would avoid clawback.
Questions:
• think I could negotiate a start date for end Q2 even if the process wraps in early Q1?
• has anyone successfully had the next fund cover a clawback?
• any advice on how to message this to recruiters or funds (when to disclose, how specific)? I’ve been erring on the side of late in the process, indicating I’m very flexible on start date but early summer would avoid a clawback I have.
Appreciate any datapoints or advice.
This stuff is all pretty negotiated at those levels. They’ll most likely want you to start asap but you should ask about leeway given the clawback. They may even buy you out if they need you early (rare).
FWIW, I was able to get three months coming in at a mid level role.
Thanks. Seems like it's pretty case by case. I suppose my levers are 1) negotiate later start date and 2) negotiate a percentage of my clawback the next fund pays. I guess 3) is negotiate with my current fund to do post tax or otherwise prorated it, but that's out of my control.
Is that cash comp clawback standard at these levels? That seems incredibly prohibitive. I’m not yet at the late VP / principal level but have not heard of that at least at my shop / any other shops, but perhaps that’s more so due to me not being at that level yet.
I've only heard of a couple cases of a clawback like this - super prohibitive but when you're in the seat you don't think at first about the leaving-related risks. Learning experience.
Clawback? Lmao sue me
Lmfao they apparently have made people pay it in the past
Do you have a non-compete in addition to the clawback? It's pretty typical for people to have non-competes / notice periods, so if you don't have one, you could probably end up in a situation where you can ask for a start date right after the clawback expires, and that would end up pretty similar to what someone else would have to do because of a non-compete. If you ALSO have a non-compete... that's pretty onerous and your best bet may be to try and get the new fund to fund the clawback. If all else fails, you could also try to negotiate your exit with your existing firm to waive the clawback. Depending on the actual amount, they PROBABLY wouldn't actually try to enforce it if you pushed back on it, but you obviously can't rely on that.
Processes also always take longer than you expect, and if you need to drag things out a little bit so that the final negotiation is less egregious, you can always accept the second-to-last availability date that they offer for interviews.
Thanks. No non-compete, so I could start basically towards end of Q2 right after my clawback expires. I would need the start date to be 4-5 months assuming process ends and I sign in the next 45 days.
Thanks for the advice...I am hopeful that instead of trying to enforce 100%, current employer meets me halfway eg pro rata for 10 months of working...but not hopeful
Most funds hiring at mid-level I would think budget at least 2-6 months after offer stage given mid-levels typically have some sort of enhanced notice period / non-compete. Question for you would be is how much did you tell them / recruiter about your situation? Because this is a tricky thing to have come up at the end of a recruiting process but manageable if it comes up in the middle.
Whenever people ask me i am pretty clear with the exact timing and amount of the clawback.
Should I bring it up unforced a second time, or am I just expected to bring it up when they ask about starting timing?
Just wait for them to bring it up. The recruiter will ask you when it’s getting hot and heavy enough that it’s a relevant factor.
Hook them first, get the offer and then bring it up when you chat start date. I’d only bring it up if they’re asking during the process
bump - haws anyone had success negotiating clawbacks (e.g. for a good leaver, paying back a pro rata clawback)? And/or a payment schedule?
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